Services Sector Slows Down a Tad

India’s services sector slowed down marginally in December even though companies hired additional workers to a greater extent.

The Nikkei India Services Business Activity Index fell to 53.2 in December from 53.7 in November, showing an increase in output that was among the strongest recorded in the past two years.

A reading above 50 on this survey-based index indicates expansion, while a figure below that denotes contraction.

A sister survey on Wednesday showed manufacturing PMI slowing to 53.2 in December, taking the composite PMI down to 53.6 in December. The composite PMI combines the separate manufacturing and services indices.

The PMI services activity index is based on a survey of purchasing executives of more than 400 service providers in five categories: consumer services, transport and storage, information and communication, financial and insurance and real estate and business services. Information and communication posted the quickest increases in both new business and activity. Real estate and business services as sub-sectors recorded contractions. The consumer services category experienced a return to growth.

Subdued inflationary pressures and cooling economic growth add some support for a rate cut early next year.

Data suggested that the upturn in total new business was domestically driven as new export work was broadly unchanged following a reduction in the prior month.

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